Putting behind the tough economic times, HP is looking to forge ahead with the acquisition of 3Com that has fallen into tough times in the last few years. The latest move of HP pitches the company squarely against companies like Cisco Systems Ltd.
HP expects to acquire industry-leading product solutions in network switching, routing, and security from 3Com. Clearly the leading technology company in terms of revenue earned, HP’s portfolio features printing, software development, personal computing, providing IT infrastructural development, and other computer services.
3Com is a lesser known company, but has pioneered a networking technology known as Ethernet, which connects PCs together. 3Com is not a low-end networking solution provider. It has high-end customers in China and the company has 30 percent market share of the networking business there. The company’s high performance networking solutions has endeared it to HP. Heavily dependent on the sales of its printer-ink cartridges; HP now has another source of profit.
The current trend of tech mergers
HP’s latest move doesn’t come as a surprise in the present times. To remain viable and profitable, hi-tech companies have gone on a merger and acquisition spree in the past few years. HP, Dell, Oracle, and Cisco originally operated in their niche areas without bothering to venture outside. But as tech spending decreased due to recession these big companies started foraying into areas outside their business but not entirely unrelated.
Oracle has entered into deals with Sun enabling it to enter computer making and expand its position in database management business. To enjoy a share of the tech-consulting market, Dell, the maker of computers, acquired Perot Systems. The idea of shopping everything from a single company also appeals to corporate buyers looking to simplify their purchase processes.
Optimistic and futuristic outlook
Top executives from both the companies are optimistic of the outcome in terms of technology and service. Dave Donatelli, HP’s executive vice president and general manager, says, “By acquiring 3Com, we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry.
“By combining HP ProCurve offerings with 3Com’s extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center.”
The latest developments in the IT sector have changed the business landscape drastically. More than the business aspects, it’s the technological benefits that would accrue as a result of such mergers and acquisitions, generates more interest.
Post new comment